The Hokkaido, Kinki and Kyushu-Okinawa regions downgraded their economic assessments from three months earlier, the largest number of regions to lower their assessments since the Bank of Japan began releasing the report in April 2005. The other six regions left their appraisals unchanged from July.

"The economy as a whole expanded moderately, as most regions remained on an expansion or recovery trend," the report said. In its July report, the central bank said "all" regions had been in an expansion or recovery trend since October of last year.

Bank of Japan Osaka branch manager
Masahiro Samejima
said at a news conference after the report was released that the downward revision for the Kinki region in central Japan, also known as the Kansai region, was mainly due to weak housing investment and a slowdown in personal spending.

The report said housing investment dropped recently in all regions, mainly due to a delay in construction starts affected by enforcement of a revised Building Standard Law. Housing starts fell 43.3% in August from a year earlier, largely because of the law, the Ministry of Land, Infrastructure and Transport reported.

Mr. Samejima said corporate executives are worried about the impact of subprime-mortgage problems on the U.S. economy. "While the Kansai region slightly downgraded its economic assessment, the regional economy continued expanding," he said.